After we reported that the A340 economics were sound a year or so ago we received a mass of emails and calls that spurred us into action to put our money where our mouth is and launched a joint venture event with Airbus, Rolls Royce and CFMi about the future of the A340: how the aircraft can make good money and about what needs to be done to assist the aircraft type to remain part of the market. Our aim was to assist the remarketers, brokers and stake holders by starting a process of solving the problems that are holding the A340 back in the market right now. This process is now ongoing and the manufacturers are working to assist. Now the action, from us at least, shifts back to where we started in all this – convincing airlines that the economics of the A340 right now in this market are sound and getting your hands on an A340 type could well be a good move and you will see this editorial in full in the issue of Airline Economics coming out at the end of next week.
Let us face facts (again for those at the A340 day this week), both Boeing and Airbus have worked to solidify the belief that four engines are worse than two. As Boeing has marketed the 777 as a 747 replacement and Airbus has done the same with the A330, they have both been loud and clear that four engine aircraft are dead. In this Airline Economics was the first to state publicly in early 2012 that the crushed remarketing values and lease rates of the A340 types make it a very impressive economic option for any airline that wants to run an aircraft for a few years in the here and now. My view remains unchanged from January 2012 – The A340 is more comfortable, more reliable, quieter and less costly than all of its competitors in the here and now. Now of course if we take the values right back up to purchase price then the economics are completely lost, but we are looking at both now and out to ten years hence and I am convinced that the A340 is a very good option that is being overlooked.
I will also go further than the manufacturers at the A340 day this week to state that I am sure that in five or ten years, when 777s are coming into the secondary market there will be far greater awareness of the real (yes real) cost of GE90 overhaul and the intervals of the same and at that point many will say – I wish I could get my hands on an A340 at far less cost of purchase/lease and far less cost of engine maintenance and overhaul.
My lot in all of this has been that we must educate airlines that two engines are not better than four no matter what and we must also engage Roll Royce to assist the industry. I feel strongly that the plight of the A340-500 and 600 is a precursor of what is to come as the 787, A330, A350 and everything else with RR on wing comes to the secondary market in years to come.
I would argue to you all reading this today that more attention needs to be paid by all to warnings that the engine lessors give. They are dealing with problems from the outset that in the end affect all investors in the aircraft market down the line as engines become the bulk of the aircraft value and are central to releasing cash and creating an exit strategy.
For a great many airlines there are circumstances where an A340 will be a far greater benefit to them than any other type in the here and now. The four engines and reach of the A340 means that it can save a great deal of money. Firstly ETOPS is covered and start-ups can at once write-off the cost and delay of conforming to ETOPS. Secondly, why are more not stating to airlines the obvious when it comes to engine failure? Come on ladies and gentleman, you all know full well that shipping large engines across the globe costs a great deal in time, airport charges and shipping charges whereas four engines allows you to ferry the aircraft to a shop and get out of trouble with ease. This means in a whole host of geographic regions this aircraft allows you to cut risk factors substantially if you are in a politically unstable region, so the A340 also has a cargo/freight advantage in that respect as many of the regions where an aircraft is preferred over land/sea are indeed at this very time the most politically dangerous countries, a cause and effect situation.
So next time you hear someone totally write off the A340 think for yourself, look at the facts which Airbus, Rolls Royce and CFMi will give you, along with us here if it will assist with a sale or purchase (we do not charge) and then make your mind up. The time to purchase is now in this window of depressed prices. The problem though is whether you can get your hands on one? HiFly would bite your hand off at the right price as would Avcon and at least eight others from my emails here, but very few are willing to take the hit on a sale of an aircraft they purchased at great cost some time ago for someone else to come in and make a mint. That leads me to wonder if those that are breaking A340s in 2013 have not been a little too rash and have indeed missed an opportunity. Sure Emirates, Gulf Air and the like just want to move on fast, but for others creative thinking on the A340 will pay dividends and at least now you know that the manufacturers are behind you.
A senior figure in Hong Kong asked me recently after a lunch: “What is Airline Economics all about? Why are you guys about doing these events at reduced rates and working with manufacturers?” I am sure many of you reading this will think the same thing, especially Boeing maybe. My answer is that Airline Economics watches and listens and acts. If we see an issue that is not being raised we will raise it. If we see a requirement to assist sections of the industry then we will do what we can to meet that requirement and assist (AE Dublin 2013 for example allowed us to move on this A340 event this week). Airline Economics is here to gather information and relay the same but primarily Airline Economics is about knowledge, zero grandstanding, zero puff and 100% support for all those that support us. If our subscribers, delegates and advertisers inform us of a need for a solution, as they have with the A340, TotalCare and other issues over the years, then we will act within our power to assist them on the same in a constructive manner.
A news service worth its salt in the 21st century should not sit-back and count the money from mere reporting. It should create the news by finding the correct angle and taking action if required. Airline Economicsre-invests profits into measures that will assist the industry, be that through events such as the joint venture A340 Day this week or through heavily subsidised events that attract major airline and investor attendance and save the industry huge collective sums such as AE Dublin.
Everything we do is possible because of the support we receive from advertisers, delegates and subscribers. Thank you to those people and be sure we will continue to up the pace of de-monetizing data and information and reducing networking costs and inventing and supporting initiatives that assist this sector. Just remember it was us that started these balls rolling.